Does anyone else here spend that many hours with one transaction?

On the buy side of things, I cannot speak for other areas of the country, but I’d really like to see a Buyer try to navigate through a 12 page contract, an additional 6 page Buyer’s addendum, other addendum and then try to figure out what they need to know about “Agricultural” (and other types of) zoning, cesspools, lava ratings and flood zones on their own here in Hawaii – not to mention reading a title report, or knowing what to do if there is an encroachment or cloud on title… meanwhile the Seller’s representative is telling the buyer all sorts of lies and manipulating the situation in their Seller’s favor… my, my, my, my it’s an interesting world that we live in. I wouldn’t fix my own car, operate on myself or represent myself in court, I hire people to clean my house, watch my kids and do my dry cleaning… so what’s the big beef with Realtors??? I realize that $18k to sell a $300k house seems like a lot, but when you actually calculate the dollar per hour, figure that most transactions take about 300-400 hours of an agent’s time, we’re talking about $45-60 net, and THEN we have to pay 20% to our Broker for the privilege of doing business… that’s less money than I pay my cleaning lady. So… just my 2cents from the Beautiful Big Island of Hawaii….

I do love the idea of taking a listing for life with a buyout clause… that’s great!

Then they hired a Realtor, they realized they could not do it on their own.

Full service, limited service, or flat fee, consumers want choices that make sense. A-la-cart makes perfect sense. There is no reason to pay $18,000 to sell a $300,000 home! It’s just outrageous.

For example, I needed some work done on my car last year.

Instead of buying all the necessary tools and equipment, learning the technical knowledge required, and spending my own time and effort fixing it, I just paid a mechanic a fair price to do all of those things.

The only problem is, when we apply this logic to REALTORS, many don’t have any unique tools or equipment, appear to have absolutely no financial training or expertise beyond that of the average person, and so on the whole their “clients” would be much better served if they simply ran their own real estate errands and skipped out on paying the hefty 6% fee for the agent’s “services”.

I mean, if REALTORS were so highly skilled, you would think at least a few businesses would be willing to hire them on salary, so the businesses and their customers could benefit from the realtors’ extensive expertise.

Hmmm.

Maybe that is why virtually no businesses are ever willing to pay salaries or wages to REALTORS?

I mean, in an efficient labor market, surely some shrewd companies would hire the best realtors on salary or for wages, if their expertise was indeed so valuable.

But since this virtually never happens, this means the labor market values the “expertise” of “real estate professionals” somewhere near $0/hour.

> “I’m so sick of hearing it. Where there’s high risk, there’s high pay.
>
> Every morning, I wake up unemployed. I have to figure out where my next paycheck is coming from.

This is true for the agent the way the market works today, but that’s the problem. The fact that real estate sells on 100% commission is a horrible pricing system for delivering the services of a real estate agent. It puts the agent in a position of having to accept more risk than they should, and causes the buyers and sellers to pay more in commissions than they should.

People that are hating on agents aren’t stupid; they realize the above points. Agents simply defend their high commissions by pointing to the risk they take. But it’s the industry status quo that forces real estate consumers to use this system.

Just because agents take the risk of whether or not a property will sell today doesn’t mean it’s the best way the market should work.

In my opinion, it’s an inevitability that the pricing structure for real estate commissions will change to reflect reality in the next 3-5 years. There will start to be fixed fees for “handling” a listing — these fees will cover the agent’s expertise in dealing with the paperwork, doing marketing, preparing the house for sale, etc. This fee-for-service model will likely be a la carte, so that consumers can buy pricing services from the person that best understands the market; staging services from the person that best understands the psychology of selling, etc.

Also, in the current structure, the various parties interests are not aligned. Most sellers want to maximize sales price; agents are incentivized to sell as quickly as possible. The more an agent invests in marketing the house, the worse this incentive mis-alignment becomes, because the agent wants to recoup their risk before the listing contract expires.

It is a wonder to me why no agents have “buyback” clauses in their listing contracts. Instead of a listing contract lasting for a certain amount of time, why not make it the LIFE of the listing, unless the homeowner BUYS OUT the contract for say $1500, the value of the initial marketing services. A structure like this would nearly eliminate the risk for the agent and more closely align their incentives. This would result in more stable incomes for agents, cheaper commissions for sellers, and less wasted money in the system. The agent would be more interested in waiting out the market for the best offer they could get for their client.

Just some thoughts…

Alan